Investment Trust Insider - Opening the door to investment trusts

Register to get unlimited access to our investor forum and all editorial content, including our e-zine and weekly email. Registration is free and only takes a minute.

AAA-rated Fidelity Asian star braces for bear market

AAA-rated Fidelity Asian star braces for bear market

Nitin Bajaj might have returned more than 30% during his first year in charge of Fidelity Asian Values, but the manager has warned that the going may soon become more challenging.

AAA-rated Bajaj returned 33.8% in the year to 31 July, 18% more than the the MSCI Asia ex-Japan. The trust currently trades at a 10.7% discount.

He attributed 15% of that performance largely to his inclusion of small caps – an initially controversial mandate change criticised by some fund watchers.

The fund remains heavily invested in bluechips however, with large-caps such as Power Grid Corporation of India and Taiwan Semiconductor Manufacturing in the top 10 holdings.

He pointed out that thematically, his losing stocks had more in common than his winners.

‘The most common trait in the companies where money was lost is that these businesses carried more debt than they should have,’ he said.

‘I am generally averse to companies which need to borrow too much to operate their businesses – this is another reminded that too much debt is an enemy to all equity holders.’

‘The world is an uncertain place at best, and we may even have a bear market in the coming two or three years.

‘To me that would be an opportunity to accumulate more interesting businesses, when the market gets fearful.

‘The long-term fundamentals of Asia are good, with rising education levels and the potential for productivity which follows. As is often said, “you make  you money in the bear market; you just realise the profits in a bull market”.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.